Bridging the Gap Between S 558 and HR 1424

March 6, 2008

Despite the consensus on the need for parity, the path toward final agreement between the House and Senate – and the President – will not be easy. There is likely to be stiff resistance in the Senate to any effort to require health plans to cover every diagnosis and condition in the DSM in order to maintain coverage for mental illness. Among the differences that the House and Senate will have to resolve to get a bill that can be enacted this year are:

DSM Mandate – The requirement in the House bill dictating that if a group health plan offers coverage for any mental health or substance abuse disorder, then the plan must cover every diagnosis and condition in the DSM. The Senate contains no such mandate;

Preemption of State Mandates – The House bill contains a provision that would supersede state laws that require coverage of mental illness defined as less than the entire DSM;

Out of Network Coverage – Both bills require equity in treatment limits and financial limitations for out of network coverage, however, the House bill goes further in requiring out of network coverage for mental health and substance abuse if it exists on the medical-surgical side; and

Management of Benefits – The Senate bill contains language allowing group health plans to manage benefits through utilization review and medical necessity. While the House bill allows such benefit management, it goes further by requiring disclosure of plan information regarding medical necessity determinations.

It is important to note that BOTH bills:

Exempt from parity employers and group health plan sponsors with 50 or fewer workers, and

Authorize a cost increase exemption that would allow plans whose premiums rise more than 2% as a result of compliance to waive the parity requirement for one year (after which time the plan must come back into compliance).

The bills contain major differences with respect to the budget "pay-fors" that are required under House rules.These provisions are required to "offset" revenue lost to the Treasury as a result of enactment of parity. Under recently revived budget rules Congress must "pay for" any change in federal law that results in higher entitlement spending or lost revenue with an "offsetting" cut in another program. In the case of parity tax revenue will be lost to the government as health spending that is now made by families with after tax dollars shifts to before tax dollars. For example, spendingnow excluded from health plan coverage (e.g. because of arbitrary limits on inpatient psychiatric care that would not be allowed under parity) would be covered by health plans with pre-tax dollars.

The House bill is projected to result in nearly $3.8 billion in lost revenue and additional spending over the next decade. Under the congressional "pay-go" rules, all of this $3.8 billion must be offset. The House bill contains 2 provisions to make up for this lost revenue to the Treasury:

An increase in the rebates paid by pharmaceutical manufacturers as part of the Medicaid program. Payment of these rebates is directly linked to decisions by states to impose access restrictions such as prior authorization and step therapy on specific medications that are needed by the most vulnerable Medicaid beneficiaries. NAMI is very concerned about the impact of this increase in supplemental rebates on the most vulnerable Medicaid beneficiaries who need access to specific medications and are most at risk of disruption of their treatment when Medicaid programs impose restrictions on access to medications.

Strict new curbs under the Medicare program on the ability of physicians to refer patients to specialty hospitals in which they have an ownership interest.

The Senate bill does not contain budget offsets. However, any final bill will require offsets before it can be offered for final passage.

Finally, immediately upon passage of HR 1424, the House added a separate piece of legislation to the parity bill, the Genetic Information Nondiscrimination Act (GINA, HR 493). This bill is designed to address the misuse of personal genetic information. Like mental illness insurance parity, GINA has been pending before Congress for years. It passed the House in April 2007 and is still awaiting action in the Senate.